In this set of lectures, we will talk about time value of
money. We will go over the different possible
interpretations of interest rates, talk about the concept of
future value both for a single cash flow and then a series
of cash flows, and work on some problems which involve
solving for rates, number of periods, size of annuity
payments, and the concept of opportunity cost. The
concept of inflation premium is the expected annual
inflation in the upcoming period. The default risk premium
is a premium that a investor requires because of the risk
of default. The liquidity premium and maturity premium
are premium and investor demands because of lack of
liquidity of a investment.
money. We will go over the different possible
interpretations of interest rates, talk about the concept of
future value both for a single cash flow and then a series
of cash flows, and work on some problems which involve
solving for rates, number of periods, size of annuity
payments, and the concept of opportunity cost. The
concept of inflation premium is the expected annual
inflation in the upcoming period. The default risk premium
is a premium that a investor requires because of the risk
of default. The liquidity premium and maturity premium
are premium and investor demands because of lack of
liquidity of a investment.
